Twenty years ago, California showed the world what strong subnational climate leadership looks like. The passage of Assembly Bill 32 (AB 32), the California Global Warming Solutions Act of 2006, was a landmark achievement for climate policy and carbon markets, establishing an ambitious statewide greenhouse gas (GHG) reduction target and laying the foundation for a comprehensive approach to addressing climate change.

AB 32 set an ambitious goal of reducing emissions by approximately 15 percent below “business as usual,” which required California to reduce its GHG emissions to 1990 levels by 2020. By establishing this target and creating a statutory framework for significant emissions reductions, AB 32 set the foundation for California’s comprehensive, long-term approach toward a more sustainable, low-carbon future – and inspired other regions to set ambitious climate targets. California met the 2020 target ahead of schedule and has since increased its ambition, setting a 2030 target of reducing GHG emissions 40% below 1990 levels and a 2045 target of reducing emissions 85% below 1990 levels.

In addition to reducing emissions, California’s climate policies also protect the environment and natural resources, improve public health, invest in disadvantaged communities, and strengthen the state’s economy.

The role of carbon markets

One of the most innovative elements of California’s climate strategy was its use of an economy-wide market-based emissions trading system. California’s Cap-and-Invest Program established a declining cap on emissions, distributed and auctioned allowances, and reinvested auction funds into clean energy and community projects. To date, the program has generated more than $37 billion for climate investments in the state.

California’s Compliance Offset Program also supports the use of eligible carbon offsets as a cost-containment mechanism for regulated entities to meet their compliance obligations while directing capital toward emissions-reducing projects in uncapped sectors. To date, the Compliance Offset Program has generated more than 293.8 million tCO₂e in additional emission reductions and removals.

AB 32’s legacy is felt across California and across the world

Over the past two decades, California’s climate policies have helped drive GHG reductions and removals while encouraging innovation, providing compliance flexibility, mobilizing capital, and delivering environmental and economic benefits.

Just as importantly, California has demonstrated what is possible when subnational governments work together to connect their climate markets, strengthen market coordination, and advance shared climate goals across jurisdictions. The collaboration between California, Québec, and Washington State, with Washington’s linkage forthcoming, demonstrates how jurisdictions can build on one another’s efforts to create more connected, effective, and durable carbon markets.

The state’s Cap-and-Invest Program serves as a global model for how a robust, market-based emissions trading system at the subnational level can achieve real, additional emission reductions. By creating demand for verified emission reductions, California helped build infrastructure and market confidence that extended beyond the state’s capped sectors.

This is an important part of AB 32’s legacy. The law did not simply establish an emissions target, it helped create an enduring policy architecture in which regulation, market mechanisms, and capital could work together to deliver climate impact.

We’re honored to be advancing California’s Cap-and-Invest Program as an OPR

As one of California’s first approved Offset Project Registries, the Reserve supports the state’s Cap-and-Invest Program by listing eligible offset projects, collecting project documentation, facilitating third-party verification, and issuing Registry Offset Credits (ROCs) under CARB’s Compliance Offset Protocols.

Looking ahead

Twenty years ago, AB 32 set the foundation for a comprehensive climate strategy and helped demonstrate that subnational governments can drive meaningful emissions reductions while supporting innovation, ecosystems, public health, and economic opportunity.

Twenty years later, California’s climate leadership spurred by AB 32 continues. As California and jurisdictions around the world work to accelerate climate action, the lessons of AB 32 – and the markets, institutions, and partnerships built around it – continue to provide a foundation for what comes next.